Narrower-Than-Expected Loss at Relypsa

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Relypsa, Inc. (RLYP), which went public in November last year, reported a loss of 68 cents per share in the fourth quarter of 2013, narrower than the Zacks Consensus Estimate of a loss of 74 cents. Fourth quarter 2013 loss was also narrower than the year-ago loss. The narrower loss was primarily due to a decline in the fair value of the convertible preferred stock warrants as a result of the company’s initial public offering.

The biopharmaceutical company did not generate any revenues in the final quarter of 2013 as was the case a year ago. Research and development (R&D) costs climbed 28.2% to $10.9 million mainly due to costs associated with the potential launch of Relypsa’s pipeline candidate patiromer. The candidate is being developed to treat hyperkalemia, a condition characterized by high levels of potassium in the blood.

General and administrative expenses at Relypsa climbed 37% to $3.7 million in the final quarter of 2013. The increase was primarily due to a rise in personnel expenses and stock-based compensation expenses in anticipation of patiromer’s launch. During 2013, Relypsa completed evaluating patiromer in phase III and phase IIb trials for treating patients with hyperkalemia.

Outlook

Apart from releasing financial results, the company also provided an outlook for 2014. Relypsa projects operating expenses in the range of approximately $75 million–$95 million. The projection is inclusive of stock-based compensation expenses which are anticipated in the range of $5 million–$10 million. Costs associated with the potential launch of patiromer and general and administrative infrastructure related expenses are the drivers for the 2014 operating expenses projection.

Relypsa carries a Zacks Rank #3 (Hold). Better-ranked stocks in the biopharma space include Alkermes (ALKS), Alexion Pharmaceuticals (ALXN) and Gilead Sciences (GILD).

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